FX.co ★ UK consumers braced for energy price hikes

British consumers and businesses are on edge long before the heating season. The country is again faced with the prospect of significant energy price hikes. So, people have to deal with another challenge. According to Bloomberg, electricity bills in the UK are set to increase substantially this winter due to a sharp rise in natural gas prices amid problems in global supply chains.

Cornwall Insight Ltd. warns British consumers against difficult times ahead. Citizens are already grappling with the cost-of-living crisis. The situation is exacerbated by record levels of electricity debt.

Cornwall, the energy market analytical firm, estimates that starting from October 1, the average electricity tariff in the UK will jump by 9% to £1,714 ($2,221). The company also anticipates further increases in tariffs in early 2025. On Friday, August 23, the UK’s Gas and Electricity Markets Authority (Ofgem) will announce a new energy price cap, which represents the annual bill for a typical household.

This year, European gas futures have already soared by more than 20%. Market participants are concerned that gas supplies could be restricted at any moment due to geopolitical factors, notably the Russia-Ukraine conflict and the risk of escalating tensions in the Middle East.

Craig Lowry, a senior consultant at Cornwall, attributes the current state of "extreme volatility" in the gas market to the "prolonged impact of the energy crisis."

The fact that hundreds of thousands of retirees might lose their electricity subsidies is adding to the pressure on British consumers. Under new rules, only those receiving benefits as low-income individuals will qualify for the subsidy.